ICAEW publishes recommendations to increase trust in audit and assurance

The report, from ICAEW’s Audit and Assurance Faculty, addresses Sir Donald Brydon’s proposal that companies publish a three-year rolling audit and assurance policy, which is publicly available and put to an annual advisory vote by shareholders.

The launch of the report comes after the government announced its much-anticipated consultation on audit and corporate governance reform. The white paper draws on Brydon’s 2019 Review and includes a proposal to ‘introduce a statutory requirement on public interest entities to publish an annual Audit and Assurance Policy that describes the company’s approach to seeking assurance of its reported information over the next three years’.[1]

The guidance is a further example of the proactive work being undertaken by the profession to drive forward audit reform and follows the recent publication of ICAEW’s Audit Manifesto.[2] 

Dr Nigel Sleigh-Johnson, Director of ICAEW’s Technical Strategy Accountability Group, said: 

“There has never been more demand for trusted corporate information as stakeholders look to assess the impact of COVID-19 and climate change on business strategies. Companies that publish and implement an audit and assurance policy will provide their stakeholders with a more thorough understanding of their principal risks and instil greater confidence in the activities in place to mitigate them. 

“We consulted widely in recent months to produce this report, sharing our findings with policy makers. We found widespread support, across a range of stakeholder groups, for such a policy. Three-quarters said introducing one could lead to increased trust in company management and three-fifths thought that a policy would improve engagement with stakeholders.[3]

“We are pleased to see the idea reflected in the government white paper and would encourage UK businesses to take the initiative and create their own policies as a priority.”

Those invited to provide input into the ICAEW report included Sir Donald Brydon, government officials, audit committee chairs, investors, the FRC and representatives from firms and other accountancy organisations.

Notes to editors

1. The white paper Restoring trust in audit and corporate governance is online.
2. ICAEW’s Audit Manifesto is available here.
3. ICAEW consulted with a with a wide range of participants to provide a balanced perspective on the views of stakeholder groups that could inform these recommendations. This included a questionnaire completed by 71 people.